Wednesday, June 5, 2013 - 00:00 --
BY CHARLES MGHENYI
AND MARTIN MWAURA
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| Bangla-pesa voucher |
"The concept is not new and was
first introduced in Kisumu Ndogo, Shauri Yako and Mnazi Mmoja slums
in Kongowea."
Last week, Bangladesh slum in
Changamwe, Mombasa, was in the news with reports that it had
introduced its own currency - Bangla-pesa - to act as a substitute to
the Kenyan money.
The founders and members of the initiative found themselves in
court for allegedly using illegal currency to transact business. CID
officers from Changamwe police station with 'orders from above'
arrested five women and quickly arraigned them in court without
charges being preferred against them. Kenyan police had panicked and
read mischief in the publication of currencies meant to rival the
Kenyan shilling, mainly propelled by the existence of secessionist
groups within the area where the new 'currency' is operational. In a
sworn affidavit by Corporal Awadh Issa Mohammed, the police said they
were investigating Bangladesh slum residents Alfred Osigo, Paul
Mwania, Caroline Dama, Rose Auma and Emma Odhiambo.
In the affidavit, Mohammed asked the court to grant him three days
to conduct interrogations on the accused for suspicion of possessing
papers used for engaging in forgery. The court upheld the submission
and they were detained at the police cells for what they still
believe was unlawful. The five were later charged together with their
American co-founder on May 31. They were charged with possession of
printed papers that had currencies, a charge they deny, and were each
released on a Sh50,000 bond.
"The story that first appeared on a local daily instigated
the arrests of the innovative citizens through misreporting,"
said William Ruddick, the founder of the initiative. Ruddick said the
organisation had no intention of creating official money and that the
Bangla-Pesa was clearly labelled as a voucher. The organisation,
Koru, is a registered community-based group in Changamwe. The aim of
the initiative is to support the locals to trade and save more money
for developments. “Bangla-Pesa is a programme to strengthen and
stabilise the economy of the informal settlement of Bangladesh by
organising its more than 200 small scale businesses into a Bangla
Business Network, through which its members can utilise a
complimentary currency to mediate trades,” reads part of the
introduction statement on Koru's website. Ruddick, the co-founder of
the project, says their objective is to help the members trade their
excess capacity among themselves.
“We have seen trade increasing by more than 20 per cent and we
are not replacing the Kenyan shilling.” Ruddick is an American who
has been working with the slum dwellers in different development
projects. According to the organisation's website, credits are issued
in the form of paper-vouchers that can pass from hand to hand as
payment for goods and services. Toward the end of 2013, they hope to
add the capability of using mobile phone technology as a means of
transferring Bangla credits. “Ours is a noble cause of helping the
locals and not what was reported in the media last week,” he says.
“We are not MRC and we do not support any cause of going against
the government's wish. This is a business to business voucher system
and simply helps business record their exchange of excess capacity,”
Ruddick says. “It is credit within this mutual-credit-clearing (or
multilateral reciprocal exchange) system which provides a means of
payment that is complementary to official money,” he adds.
The Banga-Pesa voucher are only allowed to circulate within the
registered members who use it as a credit system plan and are
expected to repay it after getting Kenyan money later. According to
Ruddick, the concept is not new and was first introduced in Kisumu
Ndogo, Shauri Yako and Mnazi Mmoja slums in Kongowea.
Rose Oloo, a member of the organisation who is also out on bond,
says they just use the voucher as a means of getting products from
the members of the Bangla-Pesa Network and not just anybody else.
Oloo was at first afraid to share any details, saying it was the
cause of all their problems with the government. When she opened up
she said, “You only buy products using the voucher when you have no
money but strictly from the registered members; it is a form of
buying things on credit,” she says. John Paul Obonyo, a resident,
said negative media reports had caused panic among the villagers
after they were likened to the banned Mombasa Republican Council
secessionist group. The story has drawn a lot of reaction from across
the county with other people making fun of the concept.
Jomvu MP Badi Twalib over the weekend defended his constituents
against the government harassment following the arrest of six people
involved in the saga. While addressing residents during the Madaraka
Day celebrations, Badi said Bangla-Pesa was a self help group
initiative and was not trying to substitute the Kenyan currency. Badi
added he has worked out a deal with the Equity Bank and and they will
be training the locals on business skills from this week. “The
Bangla-Pesa works as a voucher that the residents and business will
use as a way of supporting local business and entrepreneurs.
The government should support the initiative instead of arrresting
people,” he said. Josephat Kioko, a radio journalist in Mombasa who
was shortlisted for an international award after enlightening the
Eco-Pesa, the predecessor of Bangla-Pesa in Kongowea in 2010,
expressed dismay following the misreporting of the story. Kioko came
second runners up in Diageo Africa Business Reporting Awards 2012 in
London last year with the story 'Eco-Pesa voucher'. In his official
twitter account, Kioko posted: “Police should understand this and
not wait for misinformation from media, then go on and arrest poor
Kenyans struggling with little economy.”
Jimnah Mbaru, an international renowned investment banker who has
made a remarkable contribution to the development of capital markets
in Africa, supports the idea of complimentary currencies. Mbaru, who
served as chairman of the Nairobi Stock Exchange for 10 years and
Africa Stock Exchanges Association, said Bangla-Pesa was
misunderstood. In his official twitter handle he says: “Bangla-Pesa
is just a promissory note liquiditable at a later date.
It is discountable in the secondary market. It is NOT illegal.”
“Innovation can come (from a) very unusual source. It is the mother
of necessity. M-Pesa came through this route. Who knows Bangla Pesa,”
Mbaru added on response to Kioko's tweet. Ruddick came out to defend
the idea, saying “(Bangla-Pesa) complements rather than replaces
the shilling. Have some more fact in choosing your headlines.
Sensationalism has caused a lot of harm here.” Complementary
currencies might sound new to Kenya, but many countries in the world
have this system running and has given people a chance to exchange
goods and services without use of money.
These systems may stimulate economic as well as social activities
in the local community, and encourage mutual help between its
members, consequently reveal and release idle resources unavailable
to the prevailing economic system. This may benefit the local
community, its members, and society at large. Complementary
currencies may help involve people in solving their own problems
rather than living on social benefits.
In the United Kingdom and the USA, authorities support the spread
of such social networks, as numerous examples show that complementary
currency systems leads to stronger community spirit, increase
community participation, create better quality of life, and give
elderly people a longer and more eventful life with less illness.
Alternative currencies, in theory, encourage consumers to make
purchases within their communities rather than elsewhere in the
country or abroad. "Buying local" circulates wealth in the
region, reduces unnecessary imports, and helps avoid higher
unemployment levels, supporters say.
At least 4,000 complementary currencies are now estimated to be in
circulation worldwide, compared with fewer than 100 in 1990,
according to one report drawn from the Internet. On June 19-23,
academics, government officials and practitioners drawn from all
parts of the world will congregate in the Hague, the Netherlands,
with the sole reason of debating the complementary currency systems.
According to the organisers of the event, participants will discuss,
among other issues, the innovative mobile phone payment systems in
Kenya including the award winning M-Pesa and a similar phone payment
system in Uganda.
Also to be discussed would be various community and complementary
currencies from various regions of the world including LETS, Time
Banks, the Argentine Redes de Trueque and the Ithaca Hours in the
USA. Others include the German Regiogeld, the Brazilian community
banks with surrogate currencies, the SOL currency in France and the
‘Transition Towns’ in the UK. In Belgium there's RES and the Wir
in Switzerland,.
The Hague event, according to the organisers, aims at stimulating
the exchange of ideas and experiences among the proponents of
complementary currencies and its opponents. This clearly indicates
the huge impact and the strong belief in complementary currencies all
over the world. Kenyans seems to be joining this league. However, the
big questions lingering in banking practitioners and Kenyans alike
are: What does this mean for the Kenya Revenue Authority collections?
Will the alternative currencies reduce the collections? The taxman
maybe a worried man, but for Bangladesh residents, the voucher system
is uplifting them from their poverty.
How the Lewes pound in the UK
works
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| lewis pound which works as a complimentary currency in UK |
The Lewes Pound is a local currency in
use in Lewes Town, East Sussex, in the United Kingdom. The currency
was introduced in September 2008 by a NGO movement called Transition
Towns as a mechanism to cushion the residents from the effects of
climate change, economic inflation and rising oil prices.
It is legal as a voucher but not as a currency and the notes are
valid for use for five years after which they can be exchanged for
new Lewes notes or redeemed for Sterling pound notes.
It is essentially a voucher system traded locally as a
complementary currency used alongside the sterling pounds. One can
buy the vouchers at designated Lewes Pound outlets and spend it in
stores that display the Lewes pound to buy goods and services.
By January 2009, the shops using the currency had risen from 70
when it was first introduced in 2008 to 130. Businesses that accept
the Lewes Pound include grocery stores, restaurants, hairdressers,
jewellers, pubs, yoga clubs and schools. Moreover, store owners can
use the Lewes Pound to pay their employees and local suppliers if
they accept it. In this case, it is treated as a taxable benefit.
However, It is not a legal tender and does not intend to replace
the Sterling Pound thus there is no obligation by the residents to
accept it and it is only accepted in participating outlets. The Lewes
Pound is only spent within the locality and it is aimed at benefiting
the local economy by encouraging demand for local goods and services.
It can be exchanged for Sterling Pounds and they have the same book
value. For every Lewes Pound issued, five pence is pledged to the
Live Lewes Fund which is a kitty used in funding local projects that
are not affiliated with the Lewes Pound initiative.
The Sterling Pounds exchanged for the Lewes Pound are kept in a
safe deposit box in a local bank in case people want to trade in
their Lewes Pounds.
Although it supports local trading and encourages economic growth
within the town, it tends to lose momentum in circulation because for
every Sterling Pound that leaves the market, it is replaced by a
Lewes Pound therefore there is no real growth of the Lewes Pound if
there is no demand for it. The currency will only grow if soft loans
or interest free loans are offered on them which are not yet
available since it is not a legal tender.
For safety measures, the Lewes Pound notes are printed on high
security paper with watermarks, serial numbers and other hidden
features to avoid duplication and production of fake notes. The work
done in circulating and manufacturing the currency is all voluntary.
http://www.the-star.co.ke/news/article-123201/bangla-pesa-use-alternative-currency-kenya
